This is why I use weekly data. Earlier in the week, it appeared that our bond model would issue a sell signal — and let’s be clear that this is a “sell signal” as opposed to a call of turning bearish. But as the week ended, the model remained bullish. There is no sell signal. False alarm. Fortunately, I hedged myself well in that article utilizing the phrase “end of the week” as in “we must wait until the end of the week before making it official” 3 times in the first paragraph alone. Whipsaws happen. We try to anticipate around the margins of our strategies, but honestly, sometimes we win and sometimes we lose.
In any case, the continued bullishness in the bond model is an important “tell” for this market. As previously shown, strength in bonds has been shown to be present during the market swoons in 2010, 2011, and 2012. This is the “risk off” trade. When the bond model is positive (as it is now), equities under perform.